Kot bond market booklet q1 fy2015

KINGDOM OF THAILAND BOND MARKET FINANCING THAILAND’S FUTURE & CONNECTING ASEAN

Highlight Executive Interviews

Mr. Krisda Udyanin Director-General of PDMO

Progress Update

» Funding Needs FY2015 » Saving Bond FY2015 » Bond Switching Transaction » The Relaxation on Eligible Thai-denominated Bonds and Debentures Applicants for CLMV Countries

» PDMO Bond Calendar FY2015 » GOVT Bond Auction Schedule Q1/FY2015 Basic & Essentials

» Public Debt Outstanding and Its Composition » Bond Market Capitalization ad Its Composition » Government Bond Auction Result » Non-Resident Holding in Domestic Bond Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Q1/FY2015

Thai GOVT Bond Market Overview Highlight Executive Interviews Mr. Krisda Udyanin Director-General Mr. Ace Viboolcharern Deputy Director-General

Progress Update  Funding Needs FY2015  Greenshoe Option : Privilege for MOF Outright PDs  Saving Bond FY2015  Bond Switching Transaction  The Relaxation on Eligible Thai-denominated Bonds and Debentures Applicants for CLMV Countries  PDMO Bond Calendar FY2015  GOVT Bond Auction Schedule Q1/FY2015

7 9 10 12 14 16 18

Basic & Essentials Public Debt Outstanding (as of August 2014) Bond Market Capitalization (as of Sep 2014)

5,650,512 THB Mil. (46.46% of GDP) 9,197,491 THB Mil. (76% of GDP)

21 23

Total GOVT Debt (Direct + FIDF) (as of Sep 2014)

3,479,588 THB Mil. (41 Bond Series)

25

Well-Developed Bond Market Improved GOVT Direct Debt Profile Dramatically (as of Sep 2014) » Average-Time-to-Maturity (ATM) 10yrs 8mths » Average Cost 4.1% » Well-Balanced Fixed : Floating Ratio 88 : 12 » Well-Distributed Maturity Profile 34:28:38 (<5 : 6-10 : >10yrs)

26

Non-Resident Holding in Domestic Bond » NR Holding in THB Bond   

30

(as of Sep 2014) GOVT Bond : BOT Bond : Others :

» Annual Capital Flow (YTD)  GOVT Bond :  BOT Bond :

719,389 THB Mil. (7.82% of Thai Bond Market Cap.) 613,423 THB Mil. (17.6% of GOVT Bond Outstanding.)

105,246 THB Mil. (3.9% of BOT Bond Outstanding.)

720 THB Mil. +1,867 THB Mil. +8,897 THB Mil. -7,030 THB Mil.

1

Mr. Kritsda Udyanin â&#x20AC;&#x153;The PDMO stands ready to ensure that the funding needs are met while committed to remain strictly within the fiscal sustainability frameworkâ&#x20AC;?

Question: You have been appointed Director-General at an important and challenging time for Thailand.

The government needs to proceed with political reforms, economic stimulus is needed to support growth. AEC will be in place in just over a year. What role can the PDMO play to support government policies to meet these challenges?

Kritsda: First of all, it is a great honour for me to have been appointed as the Director-General of the PDMO. It is indeed a challenging period for Thailand. But for me personally, I really see it as an opportunity.

It is an opportunity to not only ensure political stability as we move towards ASEAN Community but it is also a chance for Thailand to lay a strong foundation for sustainable economic growth.

As the only agency with an authority to raise funds for the government, I believe that the PDMO has an important role to play in ensuring that the government will meet its financing obligation at acceptable cost level. This is critically important at a time when the government is implementing 364.5 billion baht short term economic stimulus from now to December of this year. For FY2015, it is also expected that government spending through the 250 billion budget deficit and infrastructure project investment will be key drivers in achieving growth of 4%-5%.

Immediate infrastructure investment is also needed and our role in project financing which include projects monitoring and evaluation is key to timely execution of the 2.4 Trillion baht infrastructure investment projects. The investment package will start this fiscal year and will cover all major modes of transportation including rail, roads, air and water transports. Upgrades in these sectors are key factors to enhancing Thailandâ&#x20AC;&#x2122;s long term competitiveness and support connectivity as we move towards AEC at the end of 2015. Funding source will be diversified to prevent over reliance on debt issuance, as of now, funding is expected to include government budget / domestic borrowings, SOEs retained earnings, SOEs borrowing (direct borrowings and government on-lending to SOEs) and PPPs. The PDMO stands ready to ensure that the funding needs are met while at the same time remain strictly within the fiscal sustainability framework.

2

Director-General of PDMO “I very much look forward to continue to explore ways to help promote AEC financial integration further” Question: It seems that the government and SOEs will have continuous funding needs for the next few years, do you have any concerns regarding liquidity in the domestic bond market or potential breach of fiscal sustainability framework?

Kritsda: Allow me to address these two issues separately, for fund raising in the domestic bond market, I have no particular concerns. We are confident that funding can be raised for all government financing needs including budget deficit, infrastructure projects financing and refinancing of existing debt. This is because we have a wide range of instruments that we can choose from, as a result of our commitment in products development over the past couple of years. We will continue our policy of consistent supply of Benchmark bonds annually, as it is critical to support liquidity in the market. In addition, issuance of other products to meet the needs of diversified types of investors will also be continued. In this regard, I look forward to the frequent dialogue amongst all stakeholders in the bond market community.

On the issue of fiscal sustainability, public debt to GDP at around 46.46% is still well below the ceiling of 60%. We have projected that with the infrastructure projects investment over the next 8 years, the debt to GDP will peak at around 50%. Projects will then generate growth in the future which will bring down the debt to GDP level. If we look deeper into our public debt portfolio composition, it is very low risk in the sense that we have less than two percent of foreign debt, Average time to maturity has been lengthened as well as low level of floating rate debt. Therefore, I am not only confident that we can meet our funding needs, but our resilient financial position allows us to raise funds even in times of turbulence.

Question: In light of AEC in 2015, what can you do to help promote regional financial markets integration?

Kritsda: Personally, I am very excited to have a chance to be lead the PDMO as we head towards AEC at the end of next year. Over the last few years, PDMO has made a lot of progress to ensure cross-border funding between ASEAN members and international investors. PDMO has worked closely with other agencies including the Bank of Thailand (BOT) and the Securities and Exchange Commission (SEC) to find ways to reduce existing barriers to promote regional financial market integration.

We have relaxed credit rating requirements of entities wishing to issue Baht Bond in Thailand by allowing for government and non-rated entities with government guarantee to be eligible to issue Baht Bond.

Consequently, Lao PDR has successfully issued Baht Bond to fund their infrastructure projects. Baht Bond is, in fact, Lao PDR’s first issuance abroad.

In order to support the entities from the CLMV countries (Cambodia, Lao PDR, Myanmar and Vietnam) to be able to raise funds in the Thai bond market, the Baht Bond committee have agreed to allow entities from CLMV that has a local rating (TRIS or Fitch Thailand) of investment grade to be eligible for Baht Bond as well.

I very much look forward to continue to explore ways to help promote AEC financial integration further.

3

4

Mr. Ace Viboolcharern “We have been able to use up to 99.99% from the budget allocated to repay our debt obligations”

Question: In your opinion, has the PDMO been allocated sufficient debt repayment budget annually in order to ensure fiscal sustainability?

Ace: Before, I talk about the debt repayment budget allocation from the Bureau of the Budget for annual debt repayment, let me give you a picture of PDMO’s debt repayment obligations. Each year, the total amount of debt repayment is around 350 billion baht, this figure includes both principle at around 200 billion baht and the remaining 150 billion baht is for interest repayment. If we look at the budget allocation for debt repayment annually, we have only been given around 30 to 40 billion baht annually for principle repayment or only 1.5% of the annual expenditure budget (2.575 trillion baht).

The PDMO has adequate instruments including pre-funding, debt switch and back to back short term financing to refinance maturing debt. However, I feel that more budget should be allocated for principle repayment as this will help promote long term fiscal sustainability and reduce the burden on future generations. I believe that there is a need to review the allocated principle repayment amount because borrowings have been increasing every year to finance economic stimulus as well as infrastructure projects while budget amount has been declining. In this regard, we have been working very closely with the Bureau of the Budget to find ways to increase the principle repayment budget from 1% to 3% of budget expenditures, as this amount would be more in line with PDMO’s annual principle repayment.

Deputy Director-General of PDMO “…punctual with repayment and has no history of default, even in time of crisis. We remain committed to maintain Kingdom of Thailand’s credit strength.”

Question: Has the PDMO been able to maximize the allocated budget for repayment? How do you ensure that this is achieved?

Ace: At a first glance, debt repayment seems like a straight forward task. PDMO gets allocated an amount and the payment is made in an accurate and timely manner. However, in practice, the repayment forecast to obtain the budget is done a year in advance, this means that there are a lot of uncertainties regarding disbursement of loans, in particular for projects financing. We have always experience delays in projects implementation from the line ministries and from the PDMO side that responsible for financing, we will only release the funds in accordance to their progress. Annually, we anticipate that around 20 billion baht of the total repayment budget are leftover as a result of delays in loans disbursements. To ensure that budget for debt repayment is fully utilized, we work closely within the PDMO to divert the budget for other types of instruments that has the condition for prepayment for example, the P/N or term loans. At times, prepayment is our strategic method to reduce bunching risk and high cost debt obligations. This means that when the PDMO decides on a funding strategy, we always take into account debt repayment capabilities in order to ensure long term fiscal sustainability.

As a result, we have been able to use up to 99.99% from the budget allocated to repay our debt obligations.

Question: Do you have any concerns that the 2.4 trillion infrastructure projects will lead to difficulties in debt repayment in the future?

Ace: There is no major concern as the funding source for the infrastructure projects is well diversified and not all will come from government borrowings. More importantly, the borrowings will be spread out over 8 years, so there is no large borrowing in any given year.

On the other hand, I feel that the investment is necessary as it will contribute to future economic growth, generate future revenues as well as improve the quality of lives of the Thai people. In terms of debt repayment, the future revenues generated should lead to greater capabilities to repay debt raised for investment and other financing needs. Indeed, this is reflected in the public debt to GDP forecast that it will peak at around 50% which is below ceiling of 60% and declines as the investment generates higher growth.

The Kingdom of Thailand (KOT) has a good record of being punctual with repayment and has no history of default, even in time of crisis. We remain committed to maintain KOT’s credit strength.

5

Progress Update  Funding Needs FY2015  Greenshoe Option on LB21DA : Privilege for MOF Outright PDs

 Saving Bond FY2015  Bond Switching Transaction  The Relaxation on Eligible Thai-denominated Bonds and Debentures Applicants for CLMV Countries  PDMO Bond Calendar FY2015  GOVT Bond Auction Schedule Q1/FY2015

6

2015 - 2022

Government Funding Needs

560,000 THB Mil. per Year

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

On-Lending 59,XXXMB

National Catastrophe Insurance Fund 2,XXXMB

New Borrowing

New Borrowing

47,414MB

Substitution for foreign currency bond 4,XXXMB

300,000MB

86MB

Per year

Infrastructure Investment

2,400,000MB

(2015-2022)

Deficit Bill

58,940

200,666

344,084

300,000

250,000

250,000

B

100,000

75,000

-

GOVT

Roll Over

Rollover 260,000MB

-0-

52,000

52,000

Per year

149,209

231,000

304,181

181,506

127,830

118,209

208,994

6,300 6,300

102,255

182,493

149,209

231,000

304,181

181,506

127,830

118,209

208,994

6,300

102,255

182,493

85,545

104,607

271,599

100,000

101,800

(2015-2022)

FY 2015

FIDF

113,014

340,122

191,095

129,124

109,000

FY2011 113,014

FY2012 340,122

FY2013 191,095

FY2014 129,124

FY2015F FY2016F FY2017F FY2018F FY2019F FY2020F FY2021F FY2022F 37,900 109,000 -085,545 104,607 271,599 100,000 101,800

FY2011

FY2012

FY2013

FY2014

FY2015F FY2016F FY2017F FY2018F FY2019F FY2020F FY2021F FY2022F

705,XXX THB Mil.

Total Fund Raising Plan

* Include Infrastructure Investment Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

315,XXX MB

New Borrowing

-TentativeOn-Lending

Deficit

2,XXX 4,XXX

250,XXX

On-Lending Refinance

Roll Over 390,XXX MB

59,XXX

National Catastrophe Insurance Fund Substitution for foreign currency loan

(Pre-Fund)

29,XXX

66,XXX

Rollover 209,XXX Govt Debt Rollover FIDF Debt

Saving Bond Promissory Notes and Others

Inflation-Linked Bond

40,XXX

Amortized Bond

55,XXX

Loan Bond

Benchmark Bond

445,XXX THB Mil.

5-10-15-30â&#x20AC;&#x201C;50-yrs

350,XXX

86,XXX

By Bills

By Instruments

7

Benchmark Bonds : 5-10-15-30-50-yrs Inflation-Linked Bonds : ILB 15-yrs Amortized Bond : LBA 25-yrs

ALL FY2015 Government Bond

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

-Tentative445,xxx MB

Total Benchmark Bonds

Million Baht

Benchmark Bonds

Auction Size

5-yrs (LB21DA) 10-yrs (LB25DA) 15-yrs (LB296A) 30-yrs (LB446A) 50-yrs (LB616A) ILB (ILB283A) LBA (LBA37DA)

18,000-20,000 12,000-16,000 8,000-10,000 8,000-10,000 8,000-10,000 4,000-5,000 8,000-10,000

Total

350,xxxMB 95,xxxMB

5

Top-up

300,000

50 200,000

Top-up

Top-up

30

Top-up

Top-up

15

Top-up

10 100,000

Top-up

25

15

FY 2015

LB616A LB616A

LB446A LB446A

LB383A LB396A LB406A LB416A

LBA37DA LBA37DA

LB316A LB326A

LB283A LB296A LB296A

LB267A LB27DA

ILB283A ILB283A

LBF14NA LB14DA LB155A LB157A SB15NA LB15DA SB165A LBF165A SBST166A LB167A LB16NA SB16DA LB171A LB175A LB176A LB17OA LB183A LB183B SB189A LB191A LB193A LB196A LB198A LB19DA LB213A LB214A LB21DA LB21DA ILB217A LB22NA LB233A LB236A LB244A LB24DA LB25DA

0

T-Bills Plan Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

THB Mil. 60,000

Q1

Q2

Q4

Q3

45,000

6 months

10X,XXX MB

1 month

10,000 MB 10,000 MB 10,000 MB 10,000 MB

30,000

(1-M Outstanding)

15,000 15,000 15,000 15,000

MB MB MB MB

15,000

0

Oct-14

8

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

15

Inflation-L

Privilege for MOF Outright PDs In FY2015

Greenshoe Option

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Series

LB21DA (5-Yr Benchmark Bond .. Exclusivity)

Accepted Rate

Average Accepted Yield (AAY)

Maximum Amount

Additional 20% of the allocated amount

Exercise Period

T (After Auction Period between 11.00-11.30 a.m.)

Settlement Date

T+2

Greenshoe

Calendar Year

Greenshoe

Greenshoe

Greenshoe

0 - 4,000 MB.

0 - 4,000 MB.

0 - 4,000 MB.

0 - 4,000 MB.

LB21DA

LB21DA

LB21DA

LB21DA

LB21DA

1st auction 20,000 MB.

2nd auction 20,000 MB.

3rd auction 20,000 MB.

4th auction 20,000 MB.

5th auction 20,000 MB.

LB21DA 6th auction 4,000 – 20,000 MB.

Auction + Greenshoe = 100,000 - 116,000 MB. 2015

2014

Greenshoe Option will begin in January 2015 regarding to the readiness of the BOT’s add-on electronic auction system

14 MOF Outright Primary Dealers Public Debt Management Office, Ministry of Finance, Kingdom of Thailand



BBL

:

Bangkok Bank PCL.



BNPP

:

BNP Paribas, Bangkok Branch



BofA

:

Bank of America N.A., Bangkok Branch



CIMBT

:

CIMB Thai Bank Public Company Limited



CITI

:

Citibank N.A., Bangkok Branch



DBBK

:

Deutsche Bank AG., Bangkok Branch



JPMCB

:

JPMorgan Chase Bank, Bangkok Branch



KBANK

:

Kasikornbank PCL.



KGI

:

KGI Securities (Thailand) PCL.



KTB

:

Krung Thai Bank PCL.



SCB

:

Siam Commercial Bank PCL.



SCBT

:

Standard Chartered Bank (Thai) PCL.



HSBC

:

The Hongkong and Shanghai Banking Corporation Limited



TMB

:

TMB Bank PCL.

9

Structure Shift â&#x20AC;Ś Savings Bond was a Main Instrument for Government funding under the economic crisis

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

35%

4Savings %

Bond Outstanding

% of Investors in Government Debt Securities

29

(Classified by Types of Investors)

BOT 6%

NR 18%

Proportion of Household and Non-profit in Government Debt Securities

%

1,500,000 MB

Government Debt Securities

Household and Non-profit

Insurance and Other Corporation

39%

5%

1,000,000

Depository Corporation

32%

F E 1 483,839 MB 381,796 MB

424,311 MB

500,000

6 5 %

366,490 MB

Today

%

159,174 MB 69,577 MB 61,577 MB 30,000 MB 159,174 MB 18,000 MB (at the end of September 2014) -0-

Savings Bond outstanding in Thai bond market

25,000 MB 0% FY

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

20 17

2018

2021

0

2014

Savings Bond : Safe Haven for Retail Investors

08

09

10

11

12

13

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

A B C D E

Savings Bond Outstanding at the end of September 2014

159,174 MB 2009

2010

2011

1. SB15NA 2. SB165A

2012

2013

2014

(8 series) 2016 2016

2015

FY2016 Expiration of 3 SB FY2017 Expiration of 2 SB FY2018 Expiration of 1 SB FY2021 Expiration of 1 SB FY2024 Expiration of 1 SB

2017 2017

2018 2018

2019

2020

89,597 THB Mil. (56%) 8,000 THB Mil. (5%) 31,577 THB Mil. (20%) 11,836 THB Mil. (8%) 18,164 THB Mil. (11%) 2021 2021

2022

2023

2024 2024

The Last SB will be expired in next 10 years

4,000 MB

3,367 MB

3. SBST166A 82,230 MB

4. SB16DA 5. SB175A

6. SB189A 7. SB217A 8. SB247A

Bond Tenors

10

A

4,000 MB

4,000 MB

B 31,577 MB

C 11,836 MB

D 18,164 MB

E

As of September 30th, 2014

Q : Where to buy Savings bonds?

Savings bonds are exclusively for household and non-profit organization with minimum purchase of only 1,000 THB Regular savings bond (3-year tenor)

: Selling throughout a year at 4 appointed banks; Bangkok Bank, Krung Thai Bank, Kasikorn Bank and Siam Commercial Bank (since FY2011 regular SB coupon rate are between 3.5% - 4.0% p.a.)

Special savings bond (5-year or longer tenor) : Selling annually and the details will be published

by Ministry of Finance

Previous Special Savings Bonds 2010

2012

2014

Step-up savings bond 82,230 MB 123,880 Accounts

Fixed rate Savings bond 31,517 MB 9,736 Accounts

Fixed rate savings bond 30,000 MB 25,522 Accounts

2009 Step-up savings bond 80,000 MB 116,304 Accounts

5-year

6-year

6-year

7-year 3.99%

4.25%

2014

2021

10-year 2009

2014

Coupon Rate per annum

2010Coupon Rate per annum 2016

2012Coupon Rate per annum2018

4.75%

2014 Coupon Rate per annum 2024

Moving Forward to ... the Savings Community

Savings Bond Issuance Plan in FY2015 Public Debt Management Office, Ministry of Finance, KingdomofofThailand Thailand Public Debt Management Office, Ministry of Finance, Kingdom

60,000

MB

There is a plan to issue 3 series of savings bond in FY2015 as follows; A Regular savings bond 1st : 3-Year issuing size 4,000 MB 4 months selling period : December 2014 – March 2015

2nd : 3-Year issuing size 4,000 MB 4 months selling period : May – August 2015

B

Special savings bond 5-Year or longer issuing size 30,000 MB 2 weeks selling period : April 2015 (Tentative)

30,000

30,000 MB B 5-Year or Longer

4,000 MB A

4,000 MB A 3-Year

3-Year 0

December 2014 (Father’s Day)

April 2015 (Songkran Day)

May 2015 (Money Expo)

11

Reduce Refinancing Risk • •ToToReduce Refinancing Risk • To Enhance Liquidity • To Enhance Liquidity

BondSwitching Switching&&Bond BondConsolidation Consolidation Bond

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

THB Mil

200,000

Bond Switching 150,000

New

50,000

Top-up

100,000

Reduce Refinancing Risk Avoid Bunching Risk Enhance Liquidity

-

TTM

200,000

Bond Consolidation

Top-up

150,000

To Enhance Liquidity New

100,000 50,000 -

TTM

Debt Switching Scheme Public PublicDebt DebtManagement ManagementOffice, Office,Ministry Ministryof ofFinance, Finance,Kingdom Kingdomof ofThailand Thailand

Feedback from investor is key consideration for the mechanism detail Pros

Switching Scheme

1-to-1 1-to-multiple

Yield

Pricing Mechanism Switching Amount Bookbuilding Day

Ratio W/O minimum W/ minimum

One

Multiple

 Chosen scheme/option

12

+ simple to communicate, less operational risk

 

Cons - cannot accommodate all investors preference

+ capture variation of investors preference

- investors must pre-allocate source bonds or they risk fail settlement

+ easy to understand from investors perspective

- require transparent yield-to-conversion ratio to ensure smooth settlement

+ less calculation burden for allotment and settlement

- require intensive computational detail for investors



+ broaden investor participation

- higher probability of odd lot allotment

+ less round down impact for investors if minimum is set high enough

- mutual funds with small holding in each fund may be excluded



+ can see overall demand for allotment

- can create confusion for allotment

+ less confusion if choose 1-to-multiple scheme

- cannot see overall demand on the first allotment date

yr

Source Bonds for Bond Switching in H1/2015 Public PublicDebt DebtManagement ManagementOffice, Office,Ministry Ministryof ofFinance, Finance,Kingdom Kingdomof ofThailand Thailand

300,000

Thai Government Bond Maturity Profile

THB Million

Source Bonds 250,000

200,000

Outstanding @ end of FY2014 (THB Mil.) TTM @23/07/14 Rank in Secondary Trading Volume Turnover Ratio

LB155A

Coupon(%) % Share of Secondary Trading Volume

152,572

LB155A

LB15DA

152,572

132,000

10M

1Y5M

4th

6th

2.3 3.625 11

1.4 3.125 6

150,000

132,000

100,000 100,000

50,000

10 11 12

13

14

15 16 17 18 19-23

24

LB616A

LB446A

LB416A

9

LB406A

LB22NA LB233A LB236A

8

LB396A

LB21DA

7

LBA37DA LB383A

LB213A LB214A ILB217A

6

LB326A

LB19DA

5

LB316A

LB191A LB193A LB196A LB198A

4

LB296A

LB17OA LB183A LB183B

3

LB27DA ILB283A LB283A

LB16NA LB171A LB175A LB176A

2

LB25DA LB267A

LB15DA LBF165A LB167A

1

LB244A

LBF14NA LB14DA LB155A LB157A

0

LB24DA

LBF147A LBF149A

0

25 26 27 28-29 30 31-46 47

BSBC Tentative Timeline LB155A Public PublicDebt DebtManagement ManagementOffice, Office,Ministry Ministryof ofFinance, Finance,Kingdom Kingdomof ofThailand Thailand

Auditors Meeting [17 September 2014]

Domestic Roadshow

Bookbuilding Date

Allotment and Confirmation Date

Settlement Date

[28 October 2014]

[25 November 2014]

[26 November 2014]

[28 November 2014]

13

Linking CGIF & BAHT BOND to the Development of Bond Market Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Total Outstanding 9,197,491 THB Mil.

CGIF Inaugural (Noble, Hong Kong)

2,850

BAHT BOND

End of September 2014

THB Mil.

Baht Bond (Foreign Issuers Bond)

1%

(For Asian Bond 0.03% CGIF Market Initiative)

Corp Bond

23%

SOEs Bond

8%

86,284

Inaugural (Lao PDR)

THB Mil.

Updated: In 2013, Laotian Government issued 1,500 THB Mil. of 3-year baht bonds, with 4.5%of interest rate

2013 2014 2015 2016 2017 2018 2019 2020

Inv’t Grade

BOT Bond

2007 2008

2009 2010 2011 2012 2013 2014 IBRD

Natural Hedging

111111

2005 2006

KEXIM (30,700 MB)

31% Hana (18,000 MB)

CABEI

Woori (13,000 MB)

Targeted Industry

GOVT Bond

37%

ING

IBK

(10,000 MB)

ADB (10,500 MB)

Citi

(12,300 MB)

(11,553 MB)

What next?

Why now?

 Broadening Issuer Base : CLMV (Cambodia, Lao PDR, Myanmar and Vietnam)

 Entering ASEAN Economic Community (AEC)

(PDDF.)

14

 Becoming bond market leader of the region

The Relaxation on Eligible Thai Baht-denominated bonds and debentures applicants Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

(i) International Bank for Reconstruction and Development (IBRD)

IFIs

2004 The beginning of Baht Bond

(ii) Asian Development Bank (ADB) (iii) Japan Bank for International Cooperation (JBIC) CITI EBI KEXIM

2006

Relaxation

1

InternationalCreditRating

2011

Relaxation

2

Special Purpose Vehicle

(S&P’s, Moody’s, Fitch)

CABEI HANA KfW

CARGILL IBK SEK

CBA DB ING KDB WOORI

No issuance

(SPV) LAO PDR (3 times) 3Y (1) 1,500 THB Mil (MOF) 3Y (2) 434 THB Mil. 5Y 2,566 THB Mil. Total 4,500 THB Mil.

2012

Relaxation

3

Issuer’s Government Guarantee

2013

Relaxation

4

Credit Guarantee and Investment Facility

2014

Relaxation

5

Noble (Hong Kong) 3Y

(CGIF)

Proportion Guarantee : Guarantor/Issuer Rating

CLMV :

Present

2,850 THB Mil.

1 Project has been approved

Approved in principle by the committee on August 21st, 2014

Local Credit Rating [Investment Grade]

Outstanding Baht Bond

86,284

(Classified by issuers; based on TTM)

THB Mil.

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

40% Due within Y2015

THB mil.

40,000

10%

(34,400 THB Mil.)

(8,350

THB Mil.)

35,000

20

%

32%

30,000

(17,134 THB Mil.)

(27,900) CA-CIB

26%

Woori

(22,409)

25,000

70% (60,800 THB Mil.)

KEXIM 20,000

15,000

IBK

11% 10,000

8%

(9,066)

(6,500) 5,000

KEXIM

4%

3%

(3,874)

Hana

6% (5,000)

(3,000)

3% (2,235)

2% (1,500)

3%

2%

(2,800)

(2,000)

0

2014

2015

2016

2017

2018

Korean Issuers

2019

2020

2021

IFIs & ABMI

2022

2023

2024

2025

Others

Source: PDMO As of September 30th, 2014

15

16

Q2

Q1

Mar 2015

Feb 2015

Jan 2015

Dec 2014

Nov 2014

Oct 2014

Auction T-bill

Auction T-bill

25

18

11

4

17

24

23

10

16

9

3

First day of submission for Baht Bond Application (2/2015) First day of submission for MOF Outright PD's Application

10

9

2

3

2

24

27

26

23

20

19

17

13

12

16

6

5

23

16

30

Auction T-bill

Auction T-bill

Auction T-bill

Tue

Auction LB296A (15y) : 9,000 MB

Auction LB21DA (5y) : 20,000 MB ILB283A (15y) : 4,000 MB 28 Roadshow Debt Switch : Announce Destination Bonds

21

14

7

2 Issue Regular Saving Bond 2/2015(3y) : Retail Only 4,000 MB (1 Dec 14 - 31 Mar 15) 9

Auction T-bill

Auction T-bill

Auction T-bill

First day of submission for Baht Bond Application (1/2015)

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

29

22

15

8

1

24

17

10

3

27

20

13

6

Mon

25

18

11

4

25

18

11

4

28

21

14

7

31

24

17

10

3

26

19

12

5

29

22

15

8

1

MPC

MPC

Quarterly PD Market Dialogue

Makha Bucha Day

New Year's Eve

Quarterly PD Market Dialogue

Auction LB616A (50y) : 9,000 MB

Constitution Day

Auction LB25DA (10y) : 12,000 MB ILB283A (15y) : 4,000 MB

Auction LB446 (30y) : 9,000 MB

11

4

27

20

13

6

30

23

16

9

2

26

19

12

5

26

19

12

5

29

22

15

8

1

25

18 MPC

Auction LBA37DA (25y) : 10,000 MB

Auction ILB283A (15y) : 4,000 MB

MPC

Auction LB296A (15y) : 8,000 MB LB616A (50y) : 9,000 MB

Wed

MOF Outright PD Committee : Quarterly PD's Evalution

New Year's Day

MOF Outright PD Committee : Annual PD's Evalution

Chulalongkorn Day

Thu

PDMO Bond Calendar FY 2015

27

20

13

6

27

20

13

6

30

23

16

9

2

26

19

12

5

28

21

14

7

31

24

17

10

3

25

18

24

17

10

3

27

20

13

6

29

Last day of submission for MOF Outright PD's Application

28

21

14

7

28

21

14

7

Quarterly Macroeconomics Report 31 (FPO)

Public Holiday

Baht Bond 1/FY2015

H.M. the King's Birthday

Last day of submission for Baht Bond Application (1/2015)

22

15

8

29

22

15

8

1

22

15

8

1

25

18

11

4

28

21

14

7

30

23

16

9

2

26

19

12

5

Sat Sun

11

4

Quarterly Macroeconomics Report 1 (FPO)

Fri

17

Q4

Q3

Sep 2015

Aug 2015

Jul 2015

Jun 2015

May 2015

Apr 2015

2

1

31

7

14

21

28

30

6

13

20

27

22

29

28

8

7

21

1

31

15

25

24

14

18

11

17

10

Quarterly Macroeconomics Report 4 (FPO)

24

23

3

16

15

9

26

25

8

19

Visakha Bucha Day

5 Issue Regular Saving Bond 2/2015(3y) : Retail Only 4,000 MB (4 May - 31 Aug 15) 12

18

11

4

28

27

14

21

Songkran Festival Day

20

13

7

6

Chakri Day

31

30

Coronation Day

Songkran Festival Day

Last day of submission for Baht Bond Application (2/2015)

30

23

16

9

2

26

19

12

5

29

22

15

8

1

25

18

10

3

27

20

13

6

29

22

15

8

1

MOF Outright PD License granted to a new member

MPC

H.M. The Queen's Birthday

MPC

Last day of submission for Baht Bond Application (3/2015)

Mid-year Bank Holiday

Quarterly PD Market Dialogue

MPC

MPC

Songkran Festival Day

24

17

10

3

27

20

13

6

30

23

16

9

2

26

19

11

4

28

21

14

7

30

23

16 24

17

10

3

25

18

11

4

28

21

14

7

31

24

17

10

3

27

20

12

5

29

22

Baht Bond 3/FY2015

Buddhist Lent Day

National Labour Day (Only Bank closes)

Baht Bond 2/FY2015

26

19

12

5

29

22

15

8

1

25

18

11

4

28

21

13

6

30

23

16

9

2

25

18

11

4

27

20

13

6

30

23

16

9

2

26

19

12

5

29

22

14

7

31

24

17

10

3

26

19

12

5

Remark : Royal Ploughing Ceremony Day- waiting for an annoucement This schedule is subject to change without prior notice.

Annual PDMO-Market Dialogue

MOF Outright PD Committee : Final Review

Asarnha Bucha Day

First day of submission for Baht Bond Application (3/2015)

CGIF MOC Meeting

MOF Outright PD Committee : First Application's Review

15

8

Quarterly Macroeconomics Report 1 (FPO)

Long-term Investor Meeting

2 Issue Special Saving Bond (5y or longer) : Retail 30,000 MB (1 - 10 Apr 15) -TentativeOnly 9

18 17,000

10,000

9,000

3.65%

Coupon

LB296A = LBA37DA = LB446A = LB616A =

LB21DA = 2. LB DA = ILB283A =

17-Dec-2021

20,000

Total

12-Dec-2025

3.85%

(Re-open

4.875%

( Re-open

22-Jun-2029

(Re-open

(Re-open

12-Mar-2028

1.25%

(Re-open

(Re-open

(Re-open

12-Dec-2037

4.26%

29-Jun-2044

4.675%

17-Jun-2061

4.85%

18,000

9,000

9,000

9,000

98,000

12,000

9,000

16,000

31 Dec 57 12,000

4,000

9,000

-

Maturity Date

:

12,000

9,000

10,000

24 Dec 57

17 Dec 57

9 Dec 57

3 Dec 57

26 Nov 57

19 Nov 57

4,000

4,000

12 Nov 57

17,000 -

10,000

9,000

5 Nov 57

29 Oct 57

24,000

Total

21 Oct 57 8,000

LB616A 50-yrs

-

4,000

LB446A 30-yrs

15 Oct 57

LBA37DA 25-yrs Amortized Bond

-

20,000

LB296A 15-yrs

8 Oct 57

Inflation-Linked Bond

ILB283A 15-yrs

-

LB25DA 10-yrs

1 Oct 57

Auction Date

LB21DA 5-yrs Exclusivity

Government Bond Auction Schedule for Q1/FY2015

Basic & Essentials Public Debt Outstanding (as of August 2014) Bond Market Capitalization (as of Sep 2014)

5,650,512 THB Mil. (46.46% of GDP) 9,197,491 THB Mil. (76% of GDP)

Total GOVT Debt (Direct + FIDF) (as of Sep 2014)

3,479,588 THB Mil. (41 Bond Series)

Well-Developed Bond Market Improved GOVT Direct Debt Profile Dramatically (as of Sep 2014) » Average-Time-to-Maturity (ATM) 10yrs 8mths » Average Cost 4.1% » Well-Balanced Fixed : Floating Ratio 88 : 12 » Well-Distributed Maturity Profile 34:28:38 (<5 : 6-10 : >10yrs) Non-Resident Holding in Domestic Bond (as of Sep 2014) » NR Holding in THB Bond  GOVT Bond :  BOT Bond :  Others : » Annual Capital Flow (YTD)  GOVT Bond :  BOT Bond :

719,389 THB Mil. (7.82% of Thai Bond Market Cap.) 613,423 THB Mil. (17.6% of GOVT Bond Outstanding.)

105,246 THB Mil. (3.9% of BOT Bond Outstanding.)

720 THB Mil. +1,867 THB Mil. +8,897 THB Mil. -7,030 THB Mil.

19

 Funding Infrastructure Investment  Connecting ASEAN

Domestic Bond Market in Transition

Public Debt Management Office, Ministry of Finance, Kingdom ofofThailand Public Debt Management Office, Ministry of Finance, Kingdom Thailand

Funding Infrastructure Investment Connecting ASEAN Ongoing Project (2013 - 2016)

Market Deepening Oriented (2010 - 2012)

Market Infrastructure

2,400,000 THB Mil. Long-Term Infrastructure Inv’t

Thai Khem Khang (350,000 THB Mil.)

Full Funding Capacity : 1,150,000 THB MB.

Regional Connectivity / AEC

Debt Folio Enhancement

2,000,000 THB Mil. Long-Term Infrastructure Inv’t

Water Decree (350,000 THB Mil.)

Sustainable Source of Fund

Credit Guarantee Investment Facility (CGIF) Foreign Currency Bond Baht Bond (CLMV)

Baht Bond (Foreign Issuers Bond)

ATM Lengthened

Well-Distributed Investor Base

Cost Lowered

Well-Balanced Fixed-Floating Ratio

FIDF Decree Passed = 70,000 THB Mil. Fiscal Space

Well-Distributed Maturity Profile / Bond Switching Bond Switching (1st execution: 28 Nov 14)

Appointed 14 MOF-Outright PD

Strengthening PD system

Activated Public Debt Management Fund

(Exclusivity, League Table, Greenshoes Option)

STRIPS Bond Scripless Retail Savings Bond  Liquidity

Innovation / Product Development

Inaugural 10-yr Inflation-Linked Bond (10-yr)

Super- Size Inaugural 25-yr Back-End Amortized Bond

Long-term Fixed Promissory Notes (25-35-45-yr)

Re-open ILB 7 yr or Launch ILB 30yr

Electronic Retail Savings Bond (3-5-yr)

STRIPS Transaction

20

Quarter PDMO one-on-group “MoF Outright PD” Dialogue

Quarter PDMO one-on-one PD Dialogue 30

Building Yield Curve / Enhancing Liquidity

Annual PDMO Market Dialogue

Annual PDMO Market Dialogue

Market Consultation

15 10 7 5 3

Bond Day 50

20

8 Tenors of Benchmark Bonds

300,000 MB

Liquidity-Oriented

150,000 MB Outstanding Amount 3 5 7 10 15 20

30

50

Public debt Outstanding (as of August 2014) = 5.65 THB Trillion (46.46% of GDP) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Components of Public Debt

Units : THB Mil.

1. Government Debt (excluded FIDF) 2. Government Debt (for FIDF) 3. Non-Financial Sate Enterprise Debt 4. Special Financial Institutions Guaranteed Debt

5. Autonomous Agency Debt

2,841,307* 1,083,438 1,095,014 615,382 15,370

5,650,512

Public Debt Outstanding

Autonomous Agency Debt

0.27% 0.015 THB Trillion

Special Financial Institutions Guaranteed Debt

10.9

% 0.61 THB Trillion

*including 76,047.55 THB Mil. of External Debt

Non-Financial

GOVT Debt 50.3%

Sate Enterprise Debt

19.4

% 1.09 THB Trillion

2.84 THB Trillion

GOVT Debt (for FIDF)

19.2

% 1.08 THB Trillion Source : Information Technology Centre, PDMO

Forecast Public Debt to GDP

Public debt projection will be in line with fiscal sustainability framework and less than 50% of GDP Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

% to GDP

70%

Sustainability Framework Sustainability Framework Debt/GDP < 60% PublicPublic Debt to GDP < 60%

60% 50%

40% 30%

Repayment Budget/Budget Expenditure < 15%

20% 10% 7.4%

2020f

2019f

2018f

2016f

2015f

2014f Public Debt to GDP

2017f

Balance Budget

0%

Repayment Budget/Budget Expenditure

Source: Policy and Planning Bureau, August 2014 , Public Debt Management Office, Ministry of Finance

(Approved by the Public Debt Policy and Supervision Committee)

21

Bond Market Cap. = 9.2 THB Trillion

GOVT Bond = 3.5 THB Trillion

($113 Bil.)*

($230 Bil.)*

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

% Share of GDP

Domestic Bond Market Classified by Issuer

140%

128%

120% 100%

112%

Baht Bond

105%

CGIF Market Initiative)

(For Asian Bond

0.03%

Corp Bond

23%

SOEs Bond

8%

BOT Bond

31%

1%

76%

80% 60% 24%

40% Asian Fin. Crisis

20%

Bond Market / GDP

Maturity Profile

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

Equity/GDP

Sep-14 September 2014

Bank Loan /GDP

2001

2000

1999

1998

1997

1996

1995

1994

1992

1993

12%

0%

2,697,991 THB Mil.

BOT vs GOVT Bond BOT ATM = 7mths GOVT ATM = 10yrs 8mth

10%

GOVT Bond 37% 3,479,588 THB Mil.

*End of Sep 2014

74% BOT

19% 26%

20%

22%

29%

≤1

1<yr≤3

3<yr≤5

5<yr≤10

10<yr≤50

End of September 2014

*Source: BOT Exchange rate (End of September 2014)

Full Capacity* of All Government Funding Instruments

1,150,000 THB Mil. per Year ($35 Bil.)**

* Under favorable market liquidity + using All funding instruments

% 5.50 5.25 5.00

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

3,479,587($4.6 THBBil.) Mil. **

LB 3 yrs LB 5 yrs LB 7 yrs LB 10 yrs LB 15 yrs LB 20 yrs LB 30 yrs LB 50 yrs

150,000 THB Mil. 120,000 THB Mil. 80,000 THB Mil. 80,000 THB Mil. 60,000 THB Mil. 60,000 THB Mil. 30,000 THB Mil. 20,000 THB Mil.

Thailand’s Loan Bonds (LBs) weighting in international indices

($4.0 Bil.) ($2.4 Bil.) ($2.4 Bil.) ($1.8 Bil.) ($1.8 Bil.) ($0.9 Bil.) ($0.6 Bil.)

GBI-EM Global JP Morgan

iBoxx Asia ex Japan Markit

7.0%

Asian Local Markets HSBC

7.8%

7.6%

Benchmark Bond

Last Update : June 2014

4.75 4.50 4.25

20

4.00

15 10

3.75

7

3.50 3.25

The “Missing Composition” of Leader role in the Bond Market Government Funding Instruments

5

3.00

Infrastructure

2.75 2.50

50

30

liquidity

3

Benchmark Bond

2.25

($20.4 Bil.) ($3.5 Bil.) ($3.5 Bil.) ($2.8 Bil.)

Benchmark Bond

~600,000THB Mil. (52%)

Savings Bond

~100,000THB Mil. (8%)

Amortized Bond

~100,000THB Mil (8%)

Inflation-Linked Bond

~80,000THB Mil. (7%)

($1.4 Bil.) ($1.0 Bil.) ($7.0 Bil.)

Promissory Note

~40,000THB Mil. (4%)

Floating Rate Bond Bank Loan

($40 Bil.) Total

~30,000THB Mil. (3%) ~200,000THB Mil. (18%)

1,150,000 THB Mil. (100%)

2.00

TTM

22

3 5 7

10

15

Source: ThaiBMA Government Bond Yield Curve (End of Sep 2014)

20

30

50 **Source: BOT Exchange rate (End of June 2014)

ment

FY2007 – FY2015

Innovation of GOVT Debt Securities

FY 2012-2015

FY 2011

FY 2007-10

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

30-yr Benchmark Bond

• Lengthen average-time-to-maturity of Total Government Debt Portfolio • Meet Long-term investors’ demand

Floating Rate Bond

• Increase floating debt ratio of Total Government Debt Portfolio • Promote BIBOR (Bangkok Interbank Offered Rate)

Step-up Savings Bond

• Broaden investor base – Retail investors • Low interest burden at the initial periods of bond

Fixed Rate Promissory Note

• Broaden investor base – Insurance / Long-term investors • Non-Benchmark tenors

50-yr Benchmark Bond

• Combat low interest rate + Lengthen average time-to-maturity • 4th country in the world (1st : UK 2nd : France 3rd : China)

10-yr Inflation-Linked Bond (ILB)

• Strong anti-inflationary signal • Deepen the Development of the Bond market • 1st country in Emerging Asian Economies

Electronic Retail Savings Bond

• Lower Minimum Amount to Purchase / Offer throughout the year • Develop the retail bond into an electronic form  Scripless System • Can be purchased via ATM, in addition of Bank Retail Branches

Amortized Bond

• Suitable financing instrument for the government’s investment mega-project in the form of PPP • Pay back the bond principal by installments  Promote the government’s fiscal discipline

Bond Switching & Consolidation

Upgrade PD Privileges

• Allow both issuer and investors to improve their portfolio • Larger outstanding size + Less bond series  Enhance liquidity in the secondary market

PDDF Activated

(Public Debt Restructuring and Domestic Bond Market Development Fund)

15-yr ILB

CGIF Activated

Baht Bond

(Credit Guarantee and Investment Facility)

Equilibrium of Domestic Bond Market Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Issuers

• 76 percent of Thailand’s debt securities are issued by Government, Bank of Thailand and State-Owned Enterprises

Credit Rating

• 96 percent of Thailand’s debt securities are classified as Investment Grade

Investors

• Thailand’s government debt securities are held by a wide group of investor types

%

Domestic Bond Market (Classified by Issuers)

Domestic Bond Market (Classified by Credit Rating) BBB Non-rated 4% 2%

Baht Bond

CGIF 0.03%

Government Debt Securities (Classified by Types of Investors)

1% A

8%

Corp Bond

23%

Government

AA 5%

Government

38%

37% SOEs

8%

SOEs 8% BOT

BOT

31%

30%

Total of 9.2 THB Trillion

Source : ThaiBMA (End of September 2014)

Total of 9.2 THB Trillion

Source : ThaiBMA (End of September 2014)

NR NR 18%% 17 Household and Non-profit

BOT BOT 66%% Insurance Insurance and and Other Corporation Corporation Other

39%% 36

5% Depository Depository Corporation Corporation

3233 % %

Total of 3.4 THB Trillion

Source : BOT (End of August 2014)

23

FY2008-FY2014 Key Success Indicators

1. Trading Volume 3. Demand Concentration

2. Turnover Ratio 4. Auction Price

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Benchmark Bond 5 yrs and Below : Highest secondary trading volume in every year Unit: % Share of Market Trading Volume

5-yr Benchmark Bondâ&#x20AC;&#x2122;s Higher Turnover Ratio : Even the higher outstanding size, turnover ratio is still more than 2 times Unit: Times

LB155A LB133A

27% 9

29%

28%

21%

20%

20%

26%

LB133A

3.1

1.5

7% FY07

LB145B 4.2

FY08

FY09

FY10 FY11

FY12

FY13

FY14

FY07

FY08

LB15DA

4.2

FY10

FY11

LB196A LB196A

2.9

2.8

2.4

FY09

LB176A

FY12

FY13

3.2

FY14

Top 10 GOVT Bond Series : Accounted for 90% of all GOVT bond trading volume in secondary market

Well-Developed Benchmark Bond Pays Off : Even with greater size of issuance, the cost of funding is still at market rate

Unit: % Share of Secondary Trading Volume

Unit: USD Bil. +0.9 bps

90% 90%

75% FY07

76% FY08

77%

80%

92%

+1.4 bps

84%

12.8

FY10

15.9

13.7

FY11

FY12

FY13

FY14

FY08

-0.2 bps

-0.4 bps FY09

To be Updated

24

16.5

14.6

223363 +1.2 bps

7.5 7.5 FY09

+3.2 bps

14.7

FY10

FY11

FY12

FY13

-2.7 bps FY14

Tier 1 > 100,000 THB Mil. in Size (91% of Trading Volume)

(3,479,588 THB Mil.)

Tier 2 > 50,000 THB Mil. in Size

(End of September 2014) THB Mil.

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

FY2014 Q4 Market Share of Trading Volume in Secondary Market Tier 2 Tier 1

(10 Series)

300,000

91%

Outstanding size (THB Mil.)

250,000

0 200,000

5

150,000

Tier 2: 50,000 – 100,000MB 0% 50 LBA 25 15

8%

50

20%

(14 Series)

40%

1%

100

60%

80%

100%

ILB

100,000 100,000

15 30

10

LB267A LB24DA LB191A LB14DA LB175A LB25DA LB25DA LB316A LB171A LB214A LB19DA LB157A LB244A LB22NA LB183A LB406A LB396A LB383A

LB416A LB183B ILB283A ILB283A LB17OA LB27DA LB193A LB213A LB326A LB283A LB16NA LB198A LB167A LB446A LB446A LB233A

LB196A LB236A LB176A LB21DA LB21DA LB155A LB15DA LB616A LB616A LBA37DA LBA37DA LB296A LB296A ILB217A

50,000

0

(8% of Trading Volume)

Tier 1: >100,000MB

FY 2015 on-the-run Benchmark Bond FY 2015 on-the-run Innovative Bond

Source : ThaiBMA

Well-Distributed Bond Maturity Profile

The outstanding size of loan bond maturing in the next 5 years

(End of September 2014)

is 1,409,778 THB Mil. (45% of Total GOVT Bond) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

THB Mil.

Current Outstanding Current Outstanding Current Outstanding

300,000

≥ THB 100 Bil. = THB 50-100 Bil. ≤ THB 50 Bil.

FY 2014 on-the-run Benchmark Bond FY 2014 on-the-run Innovative Bond

250,000

200,000

5

150,000

LBA

50

25

ILB

100,000 100,000

15

15

1

2

3

4

5

6 – 10 years

LB267A LB27DA ILB283A ILB283A LB283A LB296A LB296A LB316A LB326A LBA37DA LBA37DA LB383A LB396A LB406A LB416A LB446A LB446A

LB24DA

LB25DA LB25DA

LB19DA LB213A LB214A ILB217A LB21DA LB21DA LB22NA LB233A LB236A LB244A

TTM-

LB616A LB616A

30

10

50,000

LB14DA LB155A LB157A LB15DA LB167A LB16NA LB171A LB175A LB176A LB17OA LB183A LB183B LB191A LB193A LB196A LB198A

LB21DA LB176A

Total GOVT Bond = 41 Series

11 – 50 years

Source : ThaiBMA

25

 Average-Time-to-Maturity (ATM) = 9 yrs  Average Cost = 4.04%  Fixed : Floating = 87 : 13 As of Aug 2014

Total Domestic GOVT Debt = 3.85* THB Trillion * Excluding 76,048 THB Mil. of Foreign Debt

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Assumptions : 6 months BIBOR = 2.29%, 6 months Fixed Deposit Rate = 1.41%, Inflation = 2.09%

FIDF 1

FIDF 3

300,000

GOVT Debt (for FIDF) = 1,083,438 THB Mil.

128,000

ATM Avg. Cost Fixed : Floating Callable

= 4yrs 7mths = 3.99% = 82: 18 = 15%

61% 61%

Maturity Profile

32% 32%

7% 7% 35,000 14,000

71,000

40,000 69,000

101,800

37,900

67,537

141,963

25,000 90,584

0

39,836

15,424

100,000

58,440 27,105

116,850

200,000

   

nextNext 5 yrs

5 yrs year6-10 6 - 10 yrs

10 yrs 10yrs +

+

TTM Fiscal Year

On-lending Loan

Water Decree

Maturity Profile

13,000.00

(1) (2) (3) (4)

Well-Developed Bond Market Improved

GOV’T Direct Debt Profile Dramatically

38%

28% 6-10 yrs

10 yrs +

27,800.00

29,800.00

32,000.00 12,000.00

95,936.00

20,000.00

5,500.00

6,500.00

99,000.00

35,000.00 41,900.00

33,581.00

2,200.00

206,890.00

93,534.00

47,000.00

50,664.45

79,850.00 18,900.00

100,872.00

184,110.00

5,266.67

353,994.00

24,700.00

5,000.00 136,739.24

34%

Next 5 yrs

TTM Fiscal Year

= 10yrs 8mths = 4.06% = 88: 12 = 10%

ATM Avg. Cost Fixed : Floating Callable

129,142.00

10,000.00 86,630.2918,709.19 164,296.76

43,000.00

0

268,022.00

11,197.08

100,000

16,000.00 11,650.00

200,000

TKK

GOVT Direct Debt (exclude FIDF) = 2,765,259** THB Mil.

124,030.00

18,762.17

300,000

T-Bill

22,000.00

Budget Deficit

   

ATM Lengthened Cost Lowered Well-Balanced Fixed-Float Ratio Well-Distributed Maturity Profile

PublicDebt DebtManagement ManagementOffice, Office,Ministry Ministryof ofFinance, Finance,Kingdom Kingdomof ofThailand Thailand Public

Note : Government Direct Debt = 2.76 THB Million (exclude FIDF)

As of Dec 2007

As of August 2014 ATM

Average-Time-to-Maturity LENGTHENED by 5 yrs

10yrs 8mths ATM

5yrs 3mths Avg. cost

Avg. Cost LOWERED by 40 bps.

(While ATM Lengthened by 5 yrs)

4.5%

Avg. cost

4.1% Floating

Well-Balanced Fixed/Floating Ratio (Target : Fixed/Float ratio = 80 : 20)

10%

Floating

Fixed

Fixed

90%

88%

12%

54%

Well-Distributed Maturity Profile

28%

(Maturing Debt in the next 5 yrs is less than 50% of Total Debt) next 5 yrs year 6 -10

26

18% 10 yrs +

34%

38% 28%

next 5 yrs year 6 -10

10 yrs +

GOVT Bond Auction is decoupled from political situation

Classified by Quarterly Auction Schedule

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand 22sd May 2014

Short-term Benchmark Bond (<10 yrs) Long-term Benchmark Bond (>10 yrs) Inflation-linked Bond Amortized Bond Participated Amount (Excess Demand) Not Fully Allocated or Subscribed Spread [AAY-Yield (T-1)]

Coup d‘Etat

PM Dismissal

Dissolution of the parliament

Million Baht 100,000

Basis Points

15.0

7th May 2014

9th December 2013

Q1

Q2

Q3

Q4

57,619

+6

50,000

,020 10,080

27,554

20,0007,000 5,00013,0005,000 5,00020,0008,00012,000 LB5 LB15 LB50 LB10 LB30 ILB15 LB5 LB50 LBA25

22,425

20,119

19,540

17,885

10,00012,0009,000 4,16010,00020,0009,00013,00016,0009,000

11,410 309 3,466 20,0005,000 6,534 9,00015,0009,00016,00020,0008,691

LB15 LB10 LB30 ILB15 LB15 LB5 LB50 LBA25 LB10 LB30

LB5 ILB15 LB15 LB50 LBA25 LB30 LB10 LB5 LB50

3,570 10,00013,0005,00012,00020,0007,246 9,00015,000 8,00010,000 8,000 2,830

-0.2

-2.3

-5.4

-2.8

-3.2

-3.4

-3.7

-4.1

-6.1

-7.5

-7.0 -7.8

-8.3

0.0

LB15 LBA25 ILB15 LB30 LB5 LB50 LB15 LB10 ILB15 LBA25 LB10 LB30

-2.2

-2.4

-6.1

15,897 15,915 12,473

3,75410,286

-0.8

-1.2

-50,000

21,070

18,525

15,052

14,110

11,750

10,275

8,240

25,942 23,736

25,760

24,360

21,053

18,440 13,982

16,94218,435

7.5

42,320 32,126

31,275

3.9

T-1=- 0

48,515 39,017

37,490

4,422

-7.4

-8.1 -8.9

-9.6 -11.2

-11.4

-11.4

A B

FY 2014 GOVT Bond Auction Results Classified by Tenor

24 Sep 2014

24 Sep 2014

10 Sep 2014

03 Sep 2014

27 Aug 2014

20 Aug 2014

13 Aug 2014

30 Jul 2014

13 Aug 2014

23 Jul 2014

16 Jul 2014

09 Jul 2014

25 Jun 2014

4 Jun 2014

11 Jun 2014

28 May 2014

29 Apr 2014

14 May 2014

9 Apr 2014

29 Apr 2014

9 Apr 2014

26 Mar 2014

26 Feb 2014

19 Mar 2014

19 Feb 2014

19 Feb 2014

5 Feb 2014

12 Feb 2014

29 Jan 2014

8 Jan 2014

29 Jan 2014

18 Dec 2013

11 Dec 2013

3 Dec 2013

-12.8 11 Dec 2013

27 Nov 2013

20 Nov 2013

6 Nov 2013

-100,000

13 Nov 2013

-15 6 Nov 2013

: red

13

FY2014 Government Bond Auction Result

-15.0

Most of Benchmark Bond : Fully Allocated 30-to-50-yr Benchmark Bond : Avg.Accepted LOWER than Market Price Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Million Baht

10yr

5yr

15yr

30yr

A 10

Fully Allocated

57,619 48,515

50,000

42,320

39,017

37,490

34,422 31,275

32,126

5

27,554 21,070 15,897

16,942

3.2

2.7

20,000 20,000 20,000 20,000 20,000 1.8 20,000

3.9

2.9

17,885

15,052 10,286

3.2

21,05322,425 20,119 18,525 18,435 12,473

,

13,000 12,000 16,000 16,000 15,000 10,000

-0.2

-0.4 -1.2

0.2 -0.8

2.3 10,000 10,000 6,534 10,000 9,000 7,000

5,000 9,000 9,000 9,000 12,000 8,000

19,540 14,110 13,982 10,080 5,000

11,31113,646 309

3,754

8,000 9,000 9,000 8,691 7,246

0

-2.2

-0.2

-2.4 -3.7

-4.1

-3.2

B

-2.8

-2.3 -3.4

-5

-6.1

-50,000

-7.0 -7.8 -8.9 Short-term Benchmark Bond (<10 yrs) Long-term Benchmark Bond (>10 yrs) Not Fully Allocated or Subscribed Average Accepted Yield

-100,000

15

50yr

(Exclusivity)

T-1=- 0

Bps

Benchmark Bond 15 – 50yr

Benchmark Bond 5 – 10yr

100,000

-8.1

-8.3

-10

-9.6 -11.4

-15.0

-15

27

FY2014

 Low Cost of Funding  High Volume of Short-term Demand

T-Bill Auction Result

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Basis Points

Million Baht

T-bill (Allocated Amount) R-Bill (Allocated Amount) Participated Amount (Excess Demand) Not Fully Allocated Spread [AAY-Yield(T-1)]

T-1= 0 Same Date

SEP

28

OCT

NOV

DEC

Same Date

Same Date

Same Date

JAN

FEB

Same Date Same Date

MAR

Same Date

Same Date

APR

MAY

JUN

Keep our word… to get investors confidence for the plan 1,250,000

Unit : Million Baht

Lower-than-expected disbursement of Water Decree

Lower-than-expected disbursement of Water Decree

1,000,000 Delay of Infrastructure Investment Plan

Economic Recovery

750,000

Higher-than-expected revenue collection

Stimulus package to ease: US financial crisis

500,000

94% 99%

250,000

0

Plan: Actual:

105%

97%

100% 102%

Plan Actual

Plan Actual

Plan Actual

Plan Actual

Plan

Actual

Plan Actual

Announced Government’s funding need at PDMO’s Annual Market Dialogues in September Actual fund raising at the end of fiscal year (calculated from announced auction)

Benchmark Instruments are Benchmark Bonds : Standard Loan Bond (LB) tenors 5-10-15-30-50yr (in FY 2014) + Innovative Products : Inflation-linked Bond (ILB) + Amortized Bond (LBA) Regular issuance/ Consultation with PDs/ Pre-announced auction table

Other Instruments : Saving Bond, Floating Rate Bond, Promissory Notes, Bills and Bank Loan

29

2014 Capital Flow (Weekly accumulated) In GOVT Bond & BOT Bond

2014 (Jan- Sep 2014) GOVT Bond & BOT Bond = +1,867 THB Mil.

W

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

THB Mil.

T 22nd May 2014

Coup d‘Etat

24th Aug 2014 Gen Prayuth Appointed as PM

0

End of Sep, 2014

Annual Capital Flow classified by GOVT & BOT Bond (2007 – 2014)

+1,867 THB Mil. (2014YTD)

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand THB Mil.

+1,867 BOT

THB Mil.

GOVT

GOVT Bond

+8,897 THB Mil.

0

THB Mil. THB Mil.

BOT Bond

-7,030 THB Mil.

2014 YTD Non-resident Net Buy/Sell in BOT Bond Non-resident Net Buy/Sell in GOVT Bond

30

End of Sep, 2014

Ye

2014

Non-Resident Holding in THB Bond = 719,389 THB Mil.

Outstanding

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Thai Bond Market Cap. =9,197,491 THB Mil.

Baht Bond

1%

(Foreign Issuers Bond)

CGIF Market Initiative) 0.03% (For Asian Bond

GOVT Bond GOVT Bond

574,063 613,423

BOT Bond Bond BOT

118,177 105,246

SOE Bond Bond SOE

0-

Corp Bond Corp Bond

23%

SOEs Bond

8%

719,389

GOVT Bond Outstanding 3,479,588

31%

7.53% 7.82%

692,906

BOT Bond Outstanding 2,697,991

THB Mil.

Non-Resident 613,423 THB Mil.

BOT Bond

6.24% 6.67% 1.390% 1.28% 1.14% 1.28 0.00% 0.01 0.01% 0.01%

720 666

TOTAL TOTAL

Corp Bond

% of Thai Thai Bond Bond Market Market Cap. % Share of (9,202,573 THB Million)

Non-Res i dent Hol di ng Non-Resident Holding (THB Mi l l i on) (THB Million)

Issuer Issuer

THB Mil.

Non-Resident 105,246 THB Mil. %

%

2,697,991 THB Mil. GOVT Bond

Domestic Investors

37%

2,866,165 THB Mil.

Domestic Investors 2,592,745 THB Mil.

96.1

82.4

%

%

3,479,588 THB Mil.

End of Sep, 2014

Peers Comparison

Non-Resident Holding in Thai GOVT Bond is 613,423 THB Mil. or 17.6% of Total GOVT Bond Outstanding Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Relatively “moderate” share of NR holding by region average Indonesia

Percentage share of Non-resident Holding in Local Government Bond (Mar 2008 - Present)

35.66% Jun’ 14

Malaysia 30.76% Mar’ 14

Thailand

Peak @ 19.1% (Apr’ 13)

17.6%

End of Sep, 14

Korea 10.83% Mar’14

Japan 8.42% Mar’ 14

1.5% (27,474 THB Mil.)

2008 Source : AsianBondsOnline, ThaiBMA

2009

2010

2011

2012

2013

2014 End of Sep, 2014

31

Mission

Transparency, Discipline, Trustworthiness, Driving Social and Economic Development

Values

Professional in public debt management for sustainable development

Vision

Pro-active Debt Management

Develop Domestic Bond Market to be a Sustainable Source of Funding for the Stability of Thailandâ&#x20AC;&#x2122;s Financial System

Foster Strong and Effective Organization

3 PDMOâ&#x20AC;&#x2122;s Strategies

Formulate sound public debt management policies and strategies as well as conduct, monitor and evaluate public debt management operations under the relevant legal framework and guidelines

Source: Public Sector Development Group, PDMO

32

Teeralak Sangsnit

Executive Director

Wisut Chanmanee

Executive Director

Phimonphan Tanwattana

Sittan Sathianphattanakool

Economist

Nattakarn Boonsri, Director

Acting Executive Director

Pimpen Ladpli

Bond Market Development Bureau

Wanthanee Phongam

Economist

Siree Jongdee

Senior Economist

Chakrit Phothisuk

Economist

Fund Management and Bond Market Infrastructure Development Division Paroche Hutachareon, Acting Director

Pimpen Ladpli, Senior Expert

Government Bond Market Development Division

Economist

Sunee Eksomtramate Executive Director

Policy and Planning Bureau

Ace Viboolcharern

Executive Director

Executive Director

Puttipong Kanna

Economist

Chinaros Asava-aree

Fiscal Analyst

Chotika Uesampantakit

Economist

Laksika Tengpratip

Economist

Nakarin Prompat, Acting Director

Front Office Middle Office Back Office Support Office

Ekaraj Khuankhunsathid Secretary

Office of the Secretary

Pothirat Kijsriopak

Economist

Chanikarn Chaiyasena

Economist

Sophida Sritomya, Director

Financial Product Development Division

Sirasa Kanpittaya Executive Director

Jindarat Viriyataveekul

Theeraj Athanavanich

International Bond Market Policy Division

Payment Administration Bureau

Information Technology Center

Legal Advisory Group

Public Sector Development Group

Internal Audit Group

Public Debt Advisor

Water Management Project Financing Bureau

Public Infrastructure Project Financing Bureau

Deputy Director-General

Kritsda Udyanin

Director-General

Deputy Director-General

Bond Market Development

Debt Management Bureau 2

Bond Market Advisor

Debt Management Bureau 1

33

For Further Information : Pimpen Ladpli

pimpen@pdmo.go.th

Senior Expert on Bond Market Development Acting Executive Director of Bond Market Development Bureau

Nattakarn Boonsri

nattakarn@pdmo.go.th

Director of Government Bond Market Development Division

Sophida Sritomya

sophida@pdmo.go.th

Director of Financial Product Development Division

Paroche Hutachareon

paroche@pdmo.go.th

Acting Director of Fund Management and Bond Market Infrastructure Development Division

Nakarin Prompat

nakarin@pdmo.go.th

Acting Director of International Bond Market Policy Division http://www.pdmo.go.th

Tel. +66 2271 7999 , +66 2265 8050